City aims to hold down landing fees

Hotel and off-site parking shuttles wait for passengers at Cleveland Hopkins International Airport on Friday.

Airport shuttle and limousine operators are honking their horns in anger over the possibility of a per-trip fee to pick up and drop off passengers at Cleveland Hopkins International Airport.
For its part, the city of Cleveland, which owns and operates the airport, says it only is bringing its ground transportation fee in line with its costs and with fees charged by other airports around the country.
In the middle, the head of the Airport Ground Transportation Association, members of which include parking lot owners and airports, says the Cleveland fee increase isn't out of line with what airports nationwide are asking, though he questions the fairness of not easing in such a big increase.
Any time an airport can increase its revenue from vendors and concessionaires, it can reduce the cost airlines pay for their airport operations in the form of landing fees. The lower the charges to the airlines, the thinking among airport operators goes, the greater the likelihood an airport will get more flights or at least not lose flights in the constant reshuffling of airline schedules.
The city in January proposed charging limousine companies and airport parking and hotel shuttle operators a $3.50 trip fee whenever they come onto airport grounds. A license plate recognition system would count the trips.
The companies currently pay an annual $550 fee per vehicle to use the airport.
The airport initiated a similar fee with taxicab operators in 2007, charging a $3 trip fee that could be added to the metered fare and passed along to passengers for each trip leaving the airport.

Cost conscious

Ricky Smith, the city's director of port control and chief of the Cleveland Airport System, told Crain's in a telephone interview last Thursday, Nov. 1, that the last fee increase, to $550 a year from $500, was four years ago. Before that, for as long as airport staff could determine, the charge was $450 a year.
The current fee, Mr. Smith said, generates about $150,000 a year for the airport. The new fee would push that closer to $2 million. His argument in favor of the fee is that it would cover the cost of airport roadway maintenance that's attributable to commercial vehicles, about $1.2 million, with something left over to reduce the costs the airlines pay.
“What we're trying to do is position the airport and its cost structure to have the most favorable happen,” Mr. Smith said. “We want the airlines in a position to add service.”
Airports continually worry that cost-conscious airlines will divert flights to places with lower charges. At most U.S. airports, including Cleveland Hopkins, airlines pay all of an airport's operating costs under a master lease, minus revenue received from non-aeronautical sources, such as parking, concessions and other rental fees.
At Cleveland Hopkins in 2011, the airlines accounted for $87.4 million of $115 million in total revenue, according to published income statements.
That thinking doesn't add up for the ground transportation operators, however.
Stephen Qua II, president of Company Car & Limousine, said the fee increase could cost his firm another $180,000 annually. He said his 38 vehicles make 1,000 airport trips a week.
Mr. Qua said his company is willing to pay its fair share of the cost of parking its cars in the limousine parking lot while they wait for customers. But he questions this new fee.
“I don't know why I should pay anything more to pick up your mother at the airport than you do,” he said. “I wouldn't complain if they put one of those little baskets at the end of the roadway and everybody threw in a quarter.”

Pay to play

Mr. Smith said he thinks it's fair for a profit-making business to contribute to the cost of maintaining the airport.
“The private citizen who is dropping his mother off at the airport is not doing it for a profit and making multiple trips a day to the airport,” he said.
At a Cleveland City Council Aviation and Transportation Committee hearing Oct. 24, parking lot and hotel operators offered similar objections to the fee.
Susan Kane, a vice president of Park "N Fly, a national airport parking company that operates a lot on Snow Road near the airport, said she was worried the fee could put the company out of business in Cleveland.
“Cleveland's proposed fees clearly are out of line (with the industry) and not based on the actual cost of ground transportation service,” Ms. Kane said. She said the fee would raise the fees associated with operating the company's shuttle services from its parking lot to $228,000 a year from $5,500.
Dan Pora, assistant general manager of the Cleveland Airport Marriott, made a similar plea, saying the fee would add $38,800 to the cost of the hotel's free shuttle to the airport. He said he couldn't pass that cost along to hotel guests.
Mr. Smith discounted that argument, saying the airport's analysis suggested that the fee would add at most 25 cents to the cost of a room night at the hotel. He added that when the airport proposed the fee earlier in the year, the city was willing to forgo it until 2013, which gave companies time to build the added cost into their 2013 budgets.
Mr. Smith said he is willing to hear alternative proposals for raising revenue.

Could be worse

Ray Mundy, executive director of the Airport Ground Transportation Association, said the Cleveland fee only would be slightly above the average of what U.S. airports are charging shuttle and limousine operators. His organization is comprised of ground transportation operators, such as parking lot and limousine firms, airports and industry suppliers.
“At $550 per vehicle, the Cleveland airport, for an airport its size, would be in the lowest quartile, probably in the lowest 10% of trip fees being charged,” Mr. Mundy said. “Three dollars-fifty cents per trip would put them a little bit above average, but not a great deal.”
Mr. Mundy said some airports even are charging off-airport parking operators a percentage of their revenue, in the 8% to 10% range, as a condition for access to the airport grounds.
“Those operators would love to have a per-trip charge — that's cheaper for them,” he said.
Mr. Mundy said Cleveland might be trying to make up for lost time by pushing through a big fee increase all at once, though he suspects there might be room for negotiating a middle ground.
Councilman Martin Keane, who chairs the aviation committee, said he isn't sure how this issue will be resolved.
“I believe there are valid arguments on both sides,” he said. “We're still getting responses to our requests for more information.”
Mr. Keane said he has been told part of the problem is that some of these service providers may be locked into long-term contracts with clients, including the airlines, which negotiate room rates at airport area hotels for their flight crews.
Still, he said he hopes legislation can be passed before the end of the year.